Considering Filing Bankruptcy? Know What To Avoid Before You Attempt Filing

Co nsidering Filing Bankruptcy? Kno w W hat To Avo id B efore Yo u Attempt Filing

As you are considering filing bankruptcy, know that it comes with certain essentials that you might accidentally or innocently do wrong, ultimately hurting your bankruptcy case. Even though you’re thinking to file later this year, you’re highly advised to consult with an experienced bankruptcy attorney as plan for bankruptcy. However, before you approach an attorney, there are certain financial transactions that you’ll want to avoid. This will ensure a smooth and successful bankruptcy filing.

Do not transfer money or property You might think transferring all your balance to a relative’s bank account or putting your properties in the name of your wife, will keep them secure and exempted. However, by law,

this will be of no use. Rather, transferring assets and money may lead to a worse condition, such as the bankruptcy court may find this transaction an act of fraudulence. This holds true even though you have transferred the money or assets innocently, without having any wrong intention, such as to conceal your assets.

Here are some instances of transfers that might land you in trouble:     

Changing title to spouse’s or a child’s car that’s under your name into either of their name.

Changing the name on your bank accounts, or removing your name from the joint accounts.

Removing your name from the business ventures.

Moving funds or depositing funds into bank accounts that belong to others.

Transferring real properties that have been under your name to your wife’s or a child’s, although it is an authentic and absolutely legal transaction where you have been paid with a real value.

People do move funds or properties out of their names as soon as they start fearing to lose them in the bankruptcy process. If you, however, are thinking that having assets won’t allow you to file bankruptcy or even if filed, chances are you will lose them; an attorney will be the best to tell you things apart.

Don't pay creditors Debtors always tend to pay off as much as possible, hence many try to pay one or two of their creditors off in full before they file bankruptcy. For instance, many debtors may want to make sure that their mom’s dues are paid, so they some creditors recognize them as nice ones. These sorts of transactions are fully prohibited.

You surely can continue paying your utility bills as you have been doing in your typical course of business. In case you’ve incurred $100 on American Express last month, you surely can pay it off this month just as you would normally do. You, however, can’t make any payment that does not fall under your ordinary bills. You are not allowed to make any payment that might lead the bankruptcy court to think otherwise. Any payment made out of your ordinary course of business is called preferential transfers. These often lead to “claw back” lawsuits. If it’s issued, the representative of bankruptcy court will sue the person or entity that has been paid, to bring back the money.

Never use credit cards

Except you really need to sustain additional debts on your credit card for the necessities such as housing, food, or gas, you must stop using your credit cards totally. You surely can continue using your debit cards that will withdraw cash directly from your saving account.

Never make strange deposits into your bank account Never try depositing any money that cannot be counted as salary, neither any payment to you, in your bank account. Instances would be putting money in your bank account to favor your colleague or any relative. Filers with small-scale ventures must as well cease from leading transactions for their ventures using their personal accounts.

Do not sue anybody If you are facing any legal claim, it can be used by the bankruptcy court, irrespective of whether it’s unresolved or the amount you are termed with is unsettled. In fact, even if you are having any claims held against others and what has not been filed in the court, becomes an asset of the bankruptcy estate. Moreover, if there is any pending legal claim, consult with an experienced bankruptcy attorney before you file bankruptcy.

Think twice before you take any actions that might result in future payments If there is any fund you are expecting, will become the part of the bankruptcy estate. If it’s Chapter 7 bankruptcy you are considering, your bankruptcy trustee will take over the fund and utilize it paying off your unsecured creditors. Instance would be to agree to take a future bonus from your boss, to accept inheritance that is likely to be paid soon, or to file any tax return which allows you to a reimbursement. In a nutshell, if you are supposed to receive any money or payments at some point, discuss it with a bankruptcy attorney.

Waiting to file Most of the mistakes mentioned above can be salted if you simply wait to file. If you have heard about “look back” periods – you can use them for most of your actions or transactions -meaning the bankruptcy court will inspect a few types of your transactions over a predetermined time period right before you file bankruptcy. Now if you delay to file your bankruptcy until these episodes expire, you may avoid these problems.

Bankruptcy is surely a complex affair. Unless you consult an experienced bankruptcy attorney, you may be pushing yourself into trouble rather than coming out of them.